Infrastructure Regulation and Institutional Endowments in India: Comparative Analysis of Telecom and Electricity Regulation Policies

Post 1991 economic reforms initiatives in India, regulatory reforms have been pursued in infrastructure industries. Both the electricity and telecom industries have been opened up for private sector, but there has been little success in attracting private capital into electricity supply chain compared to increased capital investments and competition in telecommunications. This paper would examine implications of political economy and institutional framework differences to explain the difference in the performance of regulators in creating a competitive market structure in the two industries. This paper will examine the issues from an institutional economics perspective following Levy and Spiller (1994), Stern and Holder (1999) and Correa et al (2006) framework to analyse the regulatory systems. While there is a single Telecom Regulatory Authority of India (TRAI) for whole country the electricity regulatory system comprises of a Central Electricity Regulatory Commission and 18 (at present) State Electricity Regulatory Commissions (SERCs). This provides opportunity to compare whether a federal agency for telecoms and multiple agencies set up by states’ legislature in electricity could be one of the impediments in development of effective regulatory framework.